Banks' emergency SME loans reach £4.1bn

Banks have lent more than £4.1bn to small businesses under the government's programme to help firms struggling during the Covid-19 crisis.

More than £1.3bn of loans for small and medium enterprises (SMEs) were approved to 8,638 borrowers in the week to 28 April, figures from trade body UK Finance showed. The rate slowed from the week before when banks and other lenders made more than 9,000 loans worth £1.45bn.

The total number of applications rose to 52,807 from 36,000 a week earlier. 25,262 applications have been approved, up from 16,624 the previous week. The UK has almost 6m SMEs.

The so-called CBILS scheme was criticised by business groups, MPs and the governor of the Bank of England for a slow start as banks imposed hurdles on SMEs applying for support. Banks also called for personal guarantees from applicants and tried to sell commercial loans at high rates of interest.

The Treasury has told the UK's big banks to ask applicants for less information to speed up the process. "Bounce back" loans for the smallest businesses fully underwritten by the government are due to launch on Monday. Larger loans under the scheme have 80% government backing.

Suren Thiru, head of economics at the British Chambers of Commerce, said the news was better but more action was needed.

“While the number of firms accessing CBILS is on an encouraging upward curve, a concerningly high number of firms continue to struggle to access this crucial lifeline," Thiru said.

“The bounce back loan scheme is a welcome step toward getting cash to the smallest firms more quickly. The UK government and financial institutions should simplify and standardise the CBILS application processes to unlock access for more businesses of all sizes.

“Serious consideration must also be given to the expansion of grant schemes for firms unwilling to take on more debt repayments.”

Royal Bank of Scotland said on Wednesday it had lent £1.4bn under the scheme by 23 April, suggesting the government-backed bank accounted for about half of loans to that date. 52 banks and other lenders are approved for the scheme.